Member Info for ICB888

Very quiet this morning with just 8 small O trades for a volume of 37000. No AT trades so the sp remains at yesterdays close 15.18p.

IC Article continued:

“Cornish Lithium raised close to £60mn this year to fund its DLE and hard rock projects. The upcoming involvement of US oil and gas giants in this space should have been obvious from Cornish Lithium's DLE pilot plant provider: a subsidiary of Koch Industries, a key supplier to the US onshore sector.

Several UK-listed companies are also using the technology, although the weaker lithium price and the realities of smallcap project funding mean valuations are down. CleanTech Lithium's (CTL) share price has fallen a third this year, even as it gets closer to getting a $2mn pilot plant at its Chilean operations up and running. The next step will be to prove lithium fit for electric vehicle batteries can be produced consistently. It is still some way off production, however.

It's not just Aim juniors working in this space: Rio Tinto (RIO) bought the Rincon project last year and is building a starter plant (one step on from a pilot plant) to get the processing right before committing to a full-scale operation, which Bernstein estimates at around 50,000 tonnes lithium carbonate equivalent a year.

This is not the first rush of excitement after a major player signalled interest in DLE. Berkshire Hathaway (BRK.A) received backing from US President Joe Biden to extract lithium from its Salton Sea geothermal assets early last year, although this project has not yet made solid progress toward commercial production. Even earlier, a company that rebuffed a Tesla (US:TSLA) buyout in 2014, Simbol Materials, collapsed after struggling to find financing.

Berkshire has reportedly struggled with actually making a usable product, so sheer financial firepower as also wielded by Exxon and Chevron, may not be enough to succeed in this space. It will certainly help though“

It seems that CTL is ahead of the curve with its DLE pilot plans virtually ready to go. CTL could quickly become the front runner in this new technology, so right place at the right time with Exxon validated its something well worth investing.

It could be very beneficial to Exxon to fund or buy out CTL, which could provide us with an early windfall. Chile is one of the world’s main lithium producing countries so the likes of Exxon and Chevron may be keen to have operations there.

Interesting times.

Article on IC website tonight:

Oil giant Exxon sets eyes on lithium mining

ExxonMobil will produce lithium by 2027 using a technology that remains largely untested at scale

November 15, 2023

by Alex Hamer

Direct lithium extraction technology could bring on a revolution like shale oil and gas, says analysts

ExxonMobil could be joined by Chevron in shift

Just as Apple (US:APPL) moved into the mobile phone space, a giant disruption could be on the way for the lithium market. ExxonMobil (US:XOM) is aiming to produce lithium in the US within just a few years.

“Lithium is essential to the energy transition, and ExxonMobil has a leading role to play in paving the way for electrification,” said Dan Ammann, president of ExxonMobil low carbon solutions.

The technology of choice is direct lithium extraction (DLE), similar to what Cornish Lithium is proposing. It has not been proved at commercial scale yet so this Exxon project could mark a turning point for the industry. Fellow supermajor Chevron (US:CVX) has also previously expressed interest in the similarities between oil and gas extraction and DLE.

Lithium is now produced using brine ponds and hard rock mines, largely in Chile and Australia, respectively. DLE is where lithium-containing geothermal or salar brines are pumped to the surface, the lithium extracted, and then the water pumped back underground. This is potentially a quicker way to production, as shown by Exxon’s plans. The company will use “conventional oil and gas drilling methods to access lithium-rich saltwater” from reservoirs around 3km below ground. This could lead to a shale-like boom for DLE projects, said Bernstein analyst Bob Brackett.

“DLE alone has the potential to add a vast amount of supply in the middle of the cost curve,” he said. “But even without DLE, we worry about a large amount of lithium projects potentially coming online over the next few years." Brackett also made the point that capital spending by energy giants could easily shift the lithium market. “A bit of capex diverted from oil companies is a significant fraction of the entire lithium business,” he said.

There is further interest in geothermal DLE in the UK. This week, Geothermal Engineering Limited (GEL) announced it would add lithium extraction to its existing geothermal plant in Redruth as soon as next year. This will take a serious investment on top of the wells it has already drilled for energy generation. The Financial Times said GEL would initially try and raise £100mn-£200mn to get to 1,000 tonnes of lithium carbonate equivalent production a year.

Closed Up 18.2% , Number 7 on the Leaderboard on volume of 2.2 million. We haven’t seen volumes of over 2 million since mid July when this went to 55p. Let’s see if we get more of the same tomorrow as the shorts will really be on the run now as you would not want to be short in a share that could return to 50p+ in the blink of an eye. Just look at the chart in January/early February when it went from 36.5p to 89p in five weeks.

15p has now been paid several times including AT trades of up 50000. Volume currently 880000

Just a reminder from the RNS on 29th September of the news items that should land any day now:

“ The Gas Sales Agreement ("GSA"), approved by all parties, is with the Attorney General of Tanzania for final review. It is expected to be signed in the coming month.

· The Field Development Plan ("FDP") for developing the Ntorya Area is approved by all parties.

· The relevant Tanzanian Authorities have approved the Development Licence for the Ntorya Area and, as required by law, it is with the Cabinet of Ministers for final approval. The issuance of the Development Licence significantly de-risks the project, locking in the development of Ruvuma for twenty-five years.

· APT recently received the second shipment of long lead items with the third shipment enroute and expected in approximately three weeks. The shipments, among other things, include tubulars, casing and crossover joints for the spudding of CH-1 and the workover of NT-1.”

It seems highly likely as they are interdependent that the Attorney General’s approval of the GSA and Cabinet approval of the Development License by the Cabinet of Ministers will come at the same time.

Currently Up 19.2% at 28.5p on volume of 835000. Just to put this in context 1 month ago CTL was 44p and 2 months ago 58p. Further The 2 analysts offering 12 month price targets for Cleantech Lithium PLC have a median target of 272.50, with a high estimate of 295.00 and a low estimate of 250.00. The median estimate represents a 1,040.17% increase from the last price of 23.90.

It is reassuring to remember that the largest shareholder Slater Investments who recently added and is over 10%, has stuck with JLP all through the decline in sp over the last 2 years. They understand the potential of this share and clearly believe in the strategy. As the copper starts to kick in JLP will be producing serious amounts of cash, which will be turbo charged when the prices of commodities turn to a bull market. The share is massively oversold and when it turns north the rise could well be rapid.

The GENL RNS does not say “not in the near future does oil supplies open again”. It says:

“ UPDATE ON IRAQ-TÜRKIYE PIPELINE

The Iraq-Türkiye pipeline (‘ITP’) shut on 25 March 2023 While there continues to be positive language from the Federal Government of Iraq and Türkiye regarding opening, Genel has received no guidance from the KRG regarding the status or timing of the pipeline reopening The Association of the Petroleum Industry of Kurdistan (‘APIKUR’), of which Genel is a member, met with the Federal Government of Iraq’s (‘FGI’) Ministry of Oil last week The members of APIKUR have committed to continuing to work with the FGI and the KRG to resume full production and export through the ITP for the benefit of all stakeholders”

There may be further insight to be gained from GENL’s presentation at 10 am this morning.

Zac Mir’s 0.24 would be a 100% rise from here possibly by the end of the year. It seems perfectly achievable if we have news from Satoshipay or Dynasty in the next 6 weeks, in fact probably conservative if that occurs.

The last trade before the close was an AT trade at 14.8p preceded by 3 at 14.78. The sp was pulled down to 14.5p by the Uncrossing Trade. The sp was rising into the close and it will be interesting to see if it continues the rise in the morning. If we were to get news in the morning, which gets closer every day, 14.5 or 14.8 will be the least of our worries.

The trading is a little different today in that the small AT trades have now increased from low hundreds to low thousands. We have also seen several large O trades including several of 10000 and 20000 in quick succession. So as 2 million volume approaches there have been 108 trades as opposed to 400+. Tomorrow will be 2 weeks since the last RNS and we were promised “very exciting weeks ahead”. Let’s see if the excitement starts this week and the last RNS was on a Tuesday!

GENL has joined the party and is now up 12.7% which is in line with GKP’s rise.

This is from another bb:

“ https://hallgartenco.com/wp-content/uploads/2023/11/portfolio_October2023.pdf

This fund is stating it is actively short CTL with a target of 25p. CTL closed on Friday at 25.5p so they are getting close. We don’t know if others are also shorting it but when shorts close there is often a good bounce in the shareprice. This shorting would certainly explain the very sharp fall we have seen in the last month.

The small AT trades which have been at 14.22p for sometime now are just ticking up to 14.24 and some larger ones including a 20000 AT are at 14.26. Unless we see a higher level of activity this is looking like the lowest volume day of the week with current volume of 1.16 million. However if todays small rise is held it will be the highest close of the week, having closed at 13.7p last Friday.

“British independents push ahead with Moroccan gas projects

In depth

Issue 494 - 06 Nov 2023 - By James Gavin | 6 minute read

UK-headquartered independents are leading the way in developing Morocco’s onshore and offshore gas resources, as the government seeks to boost domestic supplies and reduce its reliance on expensive imports via Spain. Among recent activity, Chariot has secured environmental approval for its 1.5tcf offshore Anchois development, writes James Gavin.”

It says on the website it’s a long article and it will cost you £38 if you want to read it!

The final part of the very detailed article and Buy recommendation:

“ Although Ramsdens continues to outperform analysts’ earnings expectations, prompting another round of upgrades post results last summer, the shares are only priced on a forward PE ratio of nine and offer an attractive prospective dividend yield of 4.9 per cent. A price-to-book value of 1.3 times is modest for a cash-rich company generating a post-tax return on equity of 17 per cent and one that is performing well during a cost-of-living crisis. Liberum’s target of 290p is more than a third higher than Ramsden’s current share price.

It’s worth noting, too, that DSM’s largest holding is a liquid £2.9mn (8.5 per cent of NAV) stake in cable manufacturer Volex (VLX:285p), a £511mn market capitalisation company. In other words, the investment trust’s cash. Proceeds from the two agreed takeovers and investments in the above five holdings account for 54 per cent of DSM’s NAV.

Scope for narrowing of share price discount to NAV

The point is that there should be scope for a narrowing of DSM’s share price discount to NAV as cash distributions are made. There is also the real possibility that other portfolio companies will succumb to takeovers or corporate events at share price premiums during DSM’s wind-down process given that their listed market valuations are well below the intrinsic value of the holdings.

Indeed, investment manager Judith MacKenzie has identified key catalysts within investee companies that point to an estimated intrinsic value of the portfolio, which if divestments are carefully managed, indicates an upside of at least 50 per cent to DSM’s current market capitalisation of £28mn (59p). True, a complete wind-down could take time given the nature of some of DSM’s investments and liquidity. However, this could work in shareholders' favour as small-caps have historically outperformed strongly after downturns.

The bottom line is that there is potential for capital returns to shareholders well above DSM’s current NAV of £34mn (71.5p), a factor not reflected in the 18 per cent share price discount to NAV. Buy.

More from the IC article where Simon Thompson has separately issued buy recommendations on a number of companies in DSM’s portfolio:

“ In recent weeks, portfolio companies OnTheMarket (OTM:110p), an online residential property portal, and FireAngel Safety Technology (FA.:6.73p), a home safety product supplier, have attracted recommended cash offers at bid premiums of 261 per cent and 56 per cent to their previous day’s closing prices. DSM will receive £2.7mn cash proceeds from each holding which, when combined with its cash holdings of £1.9mn, represents 21 per cent of DSM’s net asset value (NAV).

In addition, another investee company, Aim-traded fintech payments group Equals (EQLS:119.5p), has entered talks with potential bidders that could lead to a takeover of the fast-growing challenger brand in banking and international payments. DSM’s holding in Equals is worth £2.1mn, or 78 per cent higher than cost. It could have a 45 per cent further upside if analysts’ 175p fair valuations are hit (‘Equals offers opportunity for 50 per cent upside’, 8 November 2023).

Lowly rated portfolio offers material capital upside

DSM holds positions in three other companies I am particularly keen on: Hargreaves Services (HSP:418p), an industrial group and land developer; Journeo (JNEO:205p), a transport systems provider; and Middlesbrough-based financial services group Ramsdens (RFX: 212p). Combined the holdings are worth £6mn, or 17.6 per cent of NAV. I have target prices materially higher than the current share price for all these holdings, highlighting the value opportunity on offer.

For instance, Hargreaves is being valued on a 33 per cent discount to NAV of £201mn (618p) even though the group’s renewable energy assets (three wind farms, six access agreements and two solar farm leases) have been valued between £27.2mn and £28.9mn (83p to 89p). These assets are in the books for only £6.6mn (20p). The shares are rated on a forward price/earnings (PE) ratio of 6.7 and offer a five per cent dividend yield, too. Sum-of-the-parts valuations are 84 per cent higher than the current share price.

Following two recent earnings upgrades, house broker Cavendish expects Journeo’s full-year pre-tax profit to almost quadruple to £3.7mn to produce earnings per share (EPS) of 19.7p, rising to £4.2mn and 22.7p, respectively, in 2024. On this basis, the cash-rich company’s shares are rated on a 2024 price/earnings (PE) ratio of 9.1, an unwarranted 32 per cent discount to peers. My 300p target price represents a premium of almost 50 per cent to Journeo’s current share price (‘Journeo is en route to quadrupling its profit’, 18 September 2023).

Buy recommendation from Simon Thompson of IC. This is the beginning of it:

“ Downing Strategic Micro-Cap Investment Trust (DSM: 59p) is planning an orderly wind-up of the company and to return capital to shareholders. The first distribution will be made early in 2024 and will be at least 20 per cent of DSM’s current net asset value of £34mn (71.5p).

DSM retains a portfolio of 17 well-run, niche businesses that continue to generally perform well even in a more challenging economic environment. The manager has been outperforming a falling stock market, too, reporting an 8.3 per cent decline in NAV since its last financial year-end (28 February 2023), or half the 17.1 per cent decline in the FTSE Aim All-Share Total Return (TR) index over the same period. Moreover, although the holding is 12.9 per cent below the entry-level in my 2021 Bargain Share Portfolio, the FTSE Aim All-Share TR index has shed 39 per cent of its value in the same 32-month holding period, highlighting DSM’s outperformance.

However, there is no avoiding the negative sentiment towards UK small and micro-cap companies that has led to some of the deepest investment trust’s discounts to NAV in the past 20 years, nor the fact that there is little interest in small specialist investment trusts like DSM. This explains the investment manager’s and the board’s decision to pursue an orderly wind-up of the company.

Initial distribution fully funded

Importantly, the board has the cash on hand to make the initial cash distribution. That’s because more than 20 per cent of the portfolio by value is under offer or in a strategic review process.

“Eni nears end of potential play opening oil exploration well offshore Morocco

Cinnamon-1X probe near legacy oil find said to be targeting carbonate prospect

8 November 2023 9:16 GMT UPDATED 8 November 2023 9:16 GMT

By Iain Esau in London

Eni closing in the completion of an exploration well offshore Morocco that, if successful, could open up a whole new oil play for a country whose complex geology has always posed challenges.

Dozens of exploration wells have been drilled in Moroccan waters in decades gone by, but the only commercial discovery has been the Anchois gas find which — after Repsol left the asset — is being developed by Chariot Energy.”

That’s all I can get from the website. You need to subscribe to get the rest but it looks very promising!